How do I transition from being a contracted staff member providing business development services to a freelance consultant?
I've been hired over and over again to come in to small businesses and help them reorganize and positioned for growth. I want to start consulting full time instead so I can help several clients at the same time. But I'm lost at starting my own business model as I'm unsure of how to price myself and what services to offer... And even if I can make enough money at it for it to be worth it. I'm looking for resources, a mentor, guidance, something.
I was also in that position - working full time and wanting to start my own business.
I found the most effective way to do this is to start going to local business networking events after work.
Start talking to people about how you can help them. Set up your profile on LinkedIn and here on Mosaic Hub to reflect what your services are.
Be of service to people by answering their questions here on MosaicHub, LinkedIn groups and you can also sign up with HARO -HelpAReporterOut.com and answer questions there.
That will get your name out as an authority in your niche.
I would also set up and use other social media sites such as Google+, Facebook, etc to attract new clients to your business.
Pricing is tricky. If you have hard costs for your service then take those costs and multiply by 4x (at least)
If your costs are just your time, then look at your current employer and see how they structure this and mimic that cost structure to start out.
You can tell people that your current pricing is discounted and you will be raising your prices in the near future.
I agree with Attila you have to look at all of your costs in order to be successful.
I also think checking your agreements with your current employer is essential.
I think it is a great idea. First I list couple of things for further consideration before pricing.
When you run your own business you will spend 30-50% of your time on sales and marketing depending how well you can build your platform and how automated your process is. 5-10% on administration and the rest will be consulting / project work.
It seems you have a steady income at the moment, so you could try and start building your “new life” in parallel. BUT first check your current contract for any conflict of interest/ non-compete clause.
Then you can start defining your target customers, a.k.a your niche and your products.
You can find further links and resources on my site:
Mandy, here's my consulting practice start up advice.
My first rule is “Spend no overhead before its time.” So first, get a client or two. Don’t worry about incorporating, naming, branding, or any other such things till you have some revenue-producing clients. Your initial clients will likely come from referrals, so these things will be less important.
If you operate under your own name, you won’t need to register a name initially. More important to choose a URL and register it—even if you’re not ready to build a website yet.
Once you get a couple of clients, then get a business license, DBA, etc. You’ll be a sole proprietor, I’m sure.
Never call yourself a free-lancer. (I agree with Barbara Saunders.) A freelancer is an underpaid contract employee. Be wary of calling yourself a consultant. Nobody wants to hire a consultant. What label addresses the benefit you bring to your desired clients? I call myself a “small business growth advisor,” because I only focus on small businesses that are on a growth track. This is the beginning of branding.
Pricing. Independent consultants get paid much more than in-house contract employees. Double or triple. Once you understand, and can communicate, the benefit you bring to your clients, ask yourself how much they would have to pay someone else to do that for them. Charge at least that much.
Small business owners typically underprice their services. The irony is, if your rate is too low, people will think you’re not very good.
The higher rate you charge, the better clients you’ll get. People who look for low rates don’t want to spend money, and they will nickel and dime you. They will also want you to do lower-level jobs for them. These clients will take up your time and keep you from going after more lucrative ones.
I see you are near Boise, so rates may be lower than where I am near San Francisco. But I have a client near Spokane, and he’s able to charge almost the same rates I charge. (Maybe I should raise mine!) My hourly rate is $175, but I normally charge a monthly rate for a given level of support—say $500 to $1,000 per month.
I don’t want to do work for clients that isn’t worth $175 an hour for them.
Marketing. Build a low-cost website using Wordpress, then get your face out there. People will hire you based on face-to-face contact, not based on any online profile. Go talk to local Chamber groups or Rotary luncheons so people get to know you. People want to see you, then check out your website.
I haven’t had a brochure in ten years. I rely on website, online profiles, and business cards—and talking to people.
Be wary of networking groups that are full of chiropractors, insurance agents, and acupuncturists. These are not your target clients, and they probably won’t be good referral sources for you either.
Boulders, rocks, or pebbles. Don’t take on any client that requires more than a quarter of your time. You don’t want to be a contract employee. You don’t want to be in a situation where if you lose one client, you’re out of business. Avoid the boom and bust cycle by going after a handful of medium-sized clients. Also, don’t rely on tiny clients. It takes almost as much time to market to them and to service them as it does for larger clients. Too much churn.
The huge, dominating client is a “boulder;” the tiny client is a “pebble.” You want good, solid mid-sized “rocks.”
This is a start.
Beginning a business can be overwhelming, which seems contradictory when you are starting a business to help people with their growth. I know because I've been there also. Here are a couple things to consider:
1. You need to take care of a few legal considerations, registering your name, deciding how to incorporate, getting contracts in place. I'm sure one of the legal advisers on the site can help with this part of the process, but you do need to think about it.
2. You need to establish your brand. This is your logo, color scheme, messaging, web site, etc. There are ways to do some of this on a shoestring, but the trade-off is your time. I found the best investment here was with a graphic designer to help with my logo and a web developer to build a basic site. I did both after creating my own logo and site and if I had a 'do over', I would have done this from the beginning.
3. Pricing is the toughest and Attila gave you some great advice here. I under bid my first few jobs but got better with this over time. The best thing I can tell you is never trade time for money! Bid on a project basis so that you can build in your marketing and administrative costs. I also like to multiple pricing options to prospects, based on the scope of the project.
4. Once you have these areas nailed down, you can start marketing. But don't take too long. The biggest challenge of being a solo entrepreneur is balancing the time you spend working on your business with the time you spend working in it, helping your clients. Get help. Have good resources that you can subcontract smaller jobs to so you can free up your time to keep marketing.
Mandy, owning your own business is a lot of hard work, especially in the beginning and there are no guarantees of success. However, once you get things going, there is no greater reward.
Now, I have a question for you. I've been considering formalizing a training workshop (on line) to help people in your situation work through these areas. As someone just starting out, do you think this would be helpful to you?
Good luck and much success!
The first thing to do is drop the word 'freelance'. I has an amateurish sense about it. You are a business consultant. You own a business and your product is your knowledge and expertise. Approach your potential clients as a solution provider not as an hourly outsource. Position yourself as their equal and they will pay you what you're worth. Set your business as a business. Take yourself seriously.
Congratulations on starting you own busines! It takes a lot of courage to do so.
Just like any new business owner, you need to gather your team. You will need a business attorney, accountant, insurance broker, banker and probably a few other people. I completely disagree with Ms. Gad below. If you cannot afford to hire a business attorney, you really cannot afford to go into business at this time. Doing so will save you a lot of headaches and money in the future.
You should also seek out mentors who you can trust. They will help you avoid some mistakes. That said, you are going to make lots of mistakes, so budget for them.
Feel free to contact me directly, and I would be happy to answer some of your questions.
I read through the responses and there are some great business model ideas in their answers.
I started my service business the same way. I had a full time position in a similar business with no competition clause. I in no way bit the hand that was feeding me. I never crossed that line of taking from my position, I simply did the services they wouldn't take.
I started building my business then eventually took over the business I worked for. I started and grew two other branches off my original offering different services and widening my customer base. They supported my main business new avenues that increased my service with my clients. You have to have a clear vision of what your business model is, who is your ideal client. Then look at the of services you can offer. Look for the uncommon services. When I started my first, I realized there were so many people doing the same thing I was doing. I had to quickly find a niche in my market and focus on that. I studied my competition, what people were saying about them. Then emulating the good things and trying to improve the processes. I was able to grow my business to the top of my area fairly quick. Always changing my process to better my services and allowed flexibility to my customers always changing needs.
Mandy develop a plan. Begin with what you want to make for the year and back into what you need to make monthly in order to achieve that goal. Then based on what others are currently charging for that service in your geographic area, determine how many clients you would need to meet your goal. Also do an audit of your personal financial assets and liabilities to determine how long you can take care of the essentials while you are building your business. Then decide when and if now is the right time for you to make your move. I hope this helps.
Like others have suggested, start to build your business in parallel with your full time job so you do have some income while trying to establish yourself. One thing you also need to consider is to be sure you will not be creating a "conflict of interest: with your current employer.
As far as starting your business, many libraries can connect you to SCORE, an organization of retired executives which can offer you business advice and what you need to set up your business. Since you will need a business licence, you need to decide if you are going to start a business DBA..... or form an LLC or a corporation.
Seek out other consultants who are doing the type of business you are looking to start and visit their websites and even join your local chamber of commerce group or other business associations and start networking.
You then need to also decide, if you intend to provide services locally, state-wide, nationally or internationally. Each level requires some additional requirements.
Learn about what insurances you may be required (i.e. exclusion insurance) if any. You will need to set up the appropriate bank accounts (checking, savings, etc) and you will probably need to have registered your business first with the town/city you live in to do this. Most banks need to know that you have a business license.
Get yourself an accountant who can help you set up the financial side of your business and guide you on the required taxes you need to be aware of.
I am an international seminar company who provides public speaking and presentation skills training along with internet marketing consulting and have provided over 2700 programs to clients from over 178 countries.
In fact, I am currently in Abu Dhabi, UAE for 4 weeks. If you intend to do international business, find out any additional requirements in those countries.
If you intend / need to set up a merchant account to accept credit cards, you will need to do that as well.
www. LJLSeminars. com
You have a perfect opportunity to do some market research with your current client base. One recommendation is to simply ask a few of those small businesses that you have been contracting with - to lunch. Start networking with those people and ask what they are currently paying for hour for your services. Share one at a time - (not all at once) with them that you are thinking about accepting some side consultant jobs on services outside of your current contract house.. Ask them if they would be interested in information on your new side consultation services. (You will be able to offer lower rates than the contract house, because you won't have the same overhead).
In regards to what services to offer - stick with the services that are aligned with your talents, passions and skills. And ask your current clients what additional services would they be interested in. You may find that your current clients would be interested in some functions/services that you can provide that are not in competition with your current contract house. You may find that you can serve several clients and build up your reputations while still providing service through your contract house (as long as you are not in direct competition).
Just start gathering data through your current client contacts. You may find that as you collect more focused data - the answer will become more clear.
I have some worksheets on how much to charge based on the income you want to make. If you want to talk more about that - please reach out.
First and foremost, put together a business plan. Find a free template online.
I'm am exactly in the same position. I started with registering as a sole proprietor, putting together a company resume, company business card, and social networking. Pricing is definitely hard to locate for this type of work... I waiver between payment by hour and payment by project. If requirements are clear I will do payment by project. You also need a contract of some sort.... still haven't got that together... and then hit the ground and network! You are your own sales person unless you hire an agency.
Your question has the answer. You have been hired "over and over" to do the job.
Take an average of the benefits (salary, options, health, etc) and figure out the equivalent billable. In the same way you were hired by those companies go after new ones under the concept. I will caution you that by taking on the sales role and the fulfillment you may stretch yourself to thin and might consider a partner or outsource solutions.
2 Top Resources: Alan Weiss & Peter Block - either can help you start a consulting business and both have books with all the pieces of the puzzle put together. I prefer Alan Weiss who also has a mentoring program.
Also, be careful about your target market. When you say small businesses, you want to make sure you help people with money ("small business" can be a bit un-nerving). That being said, I hope your work translates well with larger firms - or you'll do a load of work for little companies, for little dollars.
Final thought - try to focus on project-pricing. If you work by the hour, you're a contractor, not a consultant. Others here might disagree with that. I'll fight over this one, all day long. And the reasons are too numerous to get into now.
This is a question I have been asked many times. The first thing you need to do is develop your unique value proposition based upon what you have already done successfully as you have described. Only concentrate on one thing - reorganizing, planning, brand building, etc. Then you need to develop testimonials from the clients you have already helped. Lastly, to calculate fees you need to calculate how much money you need to survive on an annual basis and then divide that number by 150 (the number of days you actually have to consult in a year) and that will give you your daily fee. The question then becomes can you market your consulting services for that daily fee? To earn $100,000 you need to charge about $675/day. Let me know if I can be more helpful?
1) Create a 4-block matrix (for your eyes only) that separates and identifies your personal strengths, weaknesses opportunities and threats.
2) Repeat step one for a SWOT that represents what you have collectively found with your previous consultancy engagements (can share this as the beginning of a strategy and plan with potential new clients).
3) Overlay the two SWOT's and variably price your hourly rate in line with what solution strengths you bring to an engagement.
4) Make sure the rates or flat fees you choose are in line with benchmark pricing from other consultants with the same strengths and in the same geographic area(s).
You ask a really good question or two: "...lost at starting my own business model as I'm unsure of how to price myself and what services to offer." You really need to know that people want your services and if you don't know how or if they do, how can you sell them to others. Business development has many parts and pieces. You might want to go back to USP or Rosser Reeves' Unique Selling Proposition or Selling Point. How will your skills be different and differentiated? Unfortunately if you don't know what skills then how do you know how to price them. You need to do some market and marketing research on yourself first. Hope that helps. All the best. The longest journey starts with the first step... and you're taking it.
There are a lot of pieces to this puzzle. You have been working in the business, and now you have to work on the business as well. I'd suggest that you go to score.org, enter your zip code and find the chapter nearest you. There are thousands of SCORE volunteers across the country who answer startup questions all of the time - legal structure, pricing, business development, etc. And your mentors can stick with you for the whole time you need them - all for FREE.
A couple of somewhat random thoughts:
Check out the Small Business Administration http://www.sba.gov/
Lots of real good information; such as, how to create a business plan, finding events to attend and sizing up your competition. Might as well use it, we pay for it.
Create a website. Get on LinkedIn. People will find you.
Develop your own methodologies/tools for solving problems. My clients like it when I show them a logical but simple to follow approach.
I like fixed pricing as well but, it really depends on the project and what part of the country you are in. For example, the East coast, where wages and costs are a bit higher, you can typically charge more than the Midwest. But, it still depends on the project.
I do both contract work for an accounting firm with manufacturing and distribution clients as well as with my own company. Also, consider the point about needing time to do marketing, administrative and consulting work when you are on your own. Set aside enough cash to live lean for a few months.
Also, consider joining an organization like APICS, ASQ, Supply Chain Council, etc. They are always looking for volunteers to help with programs, education, meetings, conferences, etc. Great way to network and develop business opportunities.
You may also want to develop a free assessment based on your expertise to get a foot in the door to be able to present findings and recommendations. Getting in front of a client is much better that an email or letter, etc.
Hope this helps. Good luck.
This is a very difficult decision to just make in a day. It also depends on what is going on outside of your working life.
Advice I got that I never took was don't quit your day job until your night job starts paying.
But more seriously, if you want to be a freelance consultant look into being an independent contractor, by no means is that your long term goal, but it is a way of getting what you want done.
Do you want to start your own company? Do you have the time? Are you ready to deal with the nitty gritty of being your own secretary?
Your question leads me to a lot of other questions. if you want you can private message me and we can discuss further.
I will keep on recommending this book because it really changed my life - Business Model Generation - it is about the Business Model Canvas and how important it is to constantly be questioning your business model.
They have another book that I haven't really gotten a chance to examine as closely but looks great - Business Model You. You might find that book helpful.
Good Luck! Either way you are going to need luck.